LEGISLATIVE COUNSEL'S DIGEST

Existing law, with certain exceptions, establishes 8 hours as a day’s work and a 40-hour workweek, and requires payment of prescribed overtime compensation for additional hours worked. Existing law authorizes the Industrial Welfare Commission to establish exemptions from overtime pay requirements for certain executive, administrative, and professional employees, as prescribed. Existing law establishes the Division of Labor Standards Enforcement in the Department of Industrial Relations for the enforcement of labor laws, including orders of the commission.

This bill would exempt from overtime compensation an executive, administrative, or professional employee, as defined, if the employee earns a monthly salary equivalent to either $3,956 or an amount no less
than twice the state minimum wage for full-time employment, as defined, whichever amount is higher.

Digest Key

Vote:
MAJORITY
Appropriation:
NO
Fiscal Committee:
YES
Local Program:
NO

Bill Text

The people of the State of California do enact as follows:

SECTION 1.

It is the intent of the Legislature in enacting this act to not change the “duties test” provisions of the overtime exemptions established in orders of the Industrial Welfare Commission for executive, administrative, or professional employees, and that those provisions will continue to apply.

SECTION 1.SEC. 2.

Section 514.5 is added to the Labor Code, to read:

514.5.

(a)An executive, administrative, or professional employee is exempt from the requirement that an overtime rate of compensation be paid pursuant to Section 510 if the employee earns a monthly salary equivalent to either three thousand nine hundred fifty-six dollars ($3,956) or an amount no less than twice the state minimum wage for full-time employment, whichever amount is higher. As used in this subdivision, section,
“full-time employment” is as defined in subdivision (c) of Section 515.

(b)As used in this section:

(1)“Executive employee” means an employee who meets all of the following:

(A)Whose duties and responsibilities
involve the management of the enterprise in which he or she is employed or of a customarily recognized department or subdivision.

(B)Who customarily and regularly directs the work of two or more other employees.

(C)Who has the authority to hire or fire other employees or whose suggestions and recommendations as to the hiring or firing and as to the advancement and promotion or any other change of status of other employees will be given particular weight.

(E)Who is primarily engaged in duties that meet the test of the exemption.

(2)“Administrative employee” means an employee who meets all of the
following:

(A)Whose duties and responsibilities involve either of the following:

(i)The performance of office or nonmanual work directly related to management policies or general business operations of his or her employer or his or her employer’s customers.

(ii)The performance of functions in the administration of a school system, or educational establishment or institution, or of a department or subdivision thereof, in work directly related to the academic instruction or training carried on therein.

(i)Regularly and directly assists a proprietor, or an employee employed in a bona fide executive or administrative capacity, as those terms are defined for purposes of this section.

(ii)Performs under only general supervision work along specialized or technical lines requiring special training, experience, or knowledge.

(iii)Executes under only general supervision special assignments and tasks.

(D)Who is primarily engaged in duties that meet the test of the exemption.

(3)“Professional employee” means an employee who meets all of the following:

(A)Who is either of the following:

(i)Licensed or certified by
the State of California and is primarily engaged in the practice of one of the following recognized professions: law, medicine, dentistry, optometry, architecture, engineering, teaching, or accounting.

(ii)Primarily engaged in an occupation commonly recognized as a learned or artistic profession. For the purposes of this clause, “learned or artistic profession” means an employee whose work is predominantly intellectual and varied in character, as opposed to routine mental, manual, mechanical, or physical work, and is of such a character that the output produced or the result accomplished cannot be standardized in relation to a given period of time, and who is primarily engaged in the performance of one of the following:

(I)Work requiring knowledge of an advanced type in a field or science, or learning customarily acquired by a prolonged course of specialized intellectual
instruction and study, as distinguished from a general academic education and from an apprenticeship, and from training in the performance of routine mental, manual, or physical processes, or work that is an essential part of or necessarily incident to any of the above work.

(II)Work that is original and creative in character in a recognized field of artistic endeavor, as opposed to work that can be produced by a person endowed with general manual or intellectual ability and training, and the result of which depends primarily on the invention, imagination, or talent of the employee, or work that is an essential part of or necessarily incident to any of the above work.

(B)Who customarily and regularly exercises discretion and independent judgment in the performance of duties set forth in clauses (i) and (ii) of subparagraph (A).